Bismillah Hirrahman ir Rahim

Islamvs.

CapitalismBy

Nadeem Ghafoor Chaudhry

Haroon Ahmed Khan

Ideology: Creed and Systems

Every Ideology has a set of fundamental concepts known as “Creed/Deen”

Specific Systems emanate from this Creed/Deen

Ideology: Creed and Systems

Systems emanating from the Creed

Secularism

Islamic Aqeedah

Capitalism: Extracting Systems from Creed

Islam: Extracting Systems from Creed

Ideology: Creed and SystemsIslamic System Secularism

Islam obliges the Muslim to use his

mind to believe in Allah and forbids

imitation in Aqeedah.

Islam calls to look deeply in the

universe to understand its law and to

be guided to the belief in the existence

of a Creator 1

Secularism is not based on mind rather it

is built on a compromise between the

Clergy and the Philosophers

Instead of coming up with a rationally

correct conclusion of the questions

secularism compels man not to discuss the

issue that if there is a Creator and does He

have any relationship with this life, rather

settles it by finding a middle path in the

form of a compromised solution

Economic System

Economic Problem

Islamic Economic System DemocracyHuman needs are of two types

Basic Needs (limited)Luxurious Needs

World resources are enough to fulfil basic needs of all the people of world 1

Human needs are unlimited while there are limited resources to fulfil them

Economic Problem

Islamic Economic System DemocracyHuman needs are of two types

Basic Needs (limited)Luxurious Needs

World resources are enough to fulfil basic needs of all the people of world 1

Human needs are unlimited while there are limited resources to fulfil them

Solution:Distribution of wealth and resources to

guarantee all basic needs to each individual

Create opportunities so that maximum number of people can work to fulfil there luxurious needs

Solution:Needs of all the people won’t be

fulfilledIncrease Production to fulfil

needs of as many people as possible

Rules related to collection of funds and its distribution constitute “Economic System” and cannot be taken from other than Islam

Methods to increase production is “Economic Science” and can be taken from other civilizations including the West

The United Nations Development Program (UNDP) reported in 1998 that the world's 225 richest people now have a combined wealth of $1 trillion. That's equal to the combined annual income of the world's 2.5 billion poorest people.

As of 1995 (the latest figures available), Federal Reserve research found that the wealth of the top one percent of Americans is greater than that of the bottom 95 percent

According to the US Census Bureau, 35.9 million people live below the poverty line in America including 12.9 million children. (http://www.census.gov)

The wealth of the three most well-to-do individuals now exceeds the combined GDP of the 48 least developed countries

UNDP calculates that an annual 4 percent levy on the world's 225 most well-to-do people (average 1998 wealth: $4.5 billion) would suffice to provide the following essentials for all those in developing countries: adequate food, safe water and sanitation, basic education, basic health care and reproductive health care.

Resources are limited- Non sense

Distribution of net worth and financial wealth in theUnited States, 1983-2007

  Total Net WorthTop 1 percent Next 19 percent Bottom 80 percent

1983 33.8% 47.5% 18.7%1989 37.4% 46.2% 16.5%1992 37.2% 46.6% 16.2%1995 38.5% 45.4% 16.1%1998 38.1% 45.3% 16.6%2001 33.4% 51.0% 15.6%2004 34.3% 50.3% 15.3%2007 34.6% 50.5% 15.0%

 

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

Where is the world is headed!!!!!

An analysis of long term trends as to the gap between the richest and poorest countries

Year Poor: Rich ratio

1820 3:1

1913 11:1

1950 35:1

1973 44:11992 72:1

Economic System:

Ownership & Types of Properties

Islamic Economic System CapitalismThree types of ownership

IndividualPublicState

Oil, Gas1, non-delectable minerals2 etc and anything on which society depends and people will disperse in pursuit for it, remains in public ownership

If these were owned individually this will deny the public from benefiting from these huge resources, creating misery for the common man

Freedom of ownershipIndividuals or companies

can own anything and everything

Multinational companies are ‘free’ to own public properties such as oil, gas, parks etc

They are ‘free’ to spend or hoard the wealth as they please

Huge resources for people’s welfare Cost of utilities much lower The foundation of economic colonisation

Economic System:

Pakistan’s Privatization DrivePrivatized To Be privatized

ABL, HBL, UBL, MCBBankers Equity LtdHub Power Co, Kot Addu Power CoPTCL (Ufone, Paknet, TIP, CTI)Steel Mill (Decision Reversed)Ghee Corporation of PakistanKESCUCH Power Ltd, Saba Power LtdDharki Power LtdOil and Gas exploration Licenses are

innumerable

OGDCL, PSO, PPL, SNGPL, SSGPLNIT, ICPSindh Engineering, Bolan TextileLyallpur Chemical and Fertilizer Co.Javedan Cement, Karachi ShipyardRepublic Motors, Lasbella TextilesHeavy Mechanical ComplexHPFL (Hazara Phosphate Fertilizer

Limited)Jamshoro Power Co, Pak Arab

Fertilizer, Mustahekam Cement

In first ten month of 2004-2005 assets worth $3.6 billion has been sold: Survey 2005:2006

Current year privatization target is 75 billion rupees.

Economic System:

TaxesIslamic Economic System Capitalism

No Taxes on common man1

GST, Income Tax, Wealth Tax, Withholding tax, toll taxes etc are all haram and will be abolished

There will be following permanent taxes Al-Kharaj 2

Al-Jizya 3

Al-Ushr 4

The fifth of Al-Rikaz 5 (hidden treasures minerals)

Import and export duty on foreign traders 6

Zakat on import and export of the Muslim Trader 7

Hima (Protecting from public properties)

63.93% (Rs 840 billion) of revenue of Pakistan comes from taxes on the people as per the budget 2006-07 figures.

Out of these taxes 67.66% (Rs 569 billion) are indirect taxation that are to be paid by even a beggar, unemployed, daily wages worker, handicapped, widow, elderly people and children without any differentiation.

Economic System:

Agriculture and Land laws

Islamic Economic System CapitalismLease of agricultural lands

(Muzariyat) is haram1Leasing of agricultural lands is

permitted

Agricultural land if not used for 3 years will be confiscated2 and allotted to someone who would cultivate it

No such restriction applies to an owner. He is “free” to do whatever he pleases

Prohibition of Muzarat coupled with obligation to cultivate land will give rise to land distribution of optimum productivity

Eradicates injustice to MuzaraysDelivers a fatal blow to the colonialist Feudal system

(“jageer darana nizam”)

Economic System:

Agriculture and Land laws

Agriculture and Land lawsIslamic Economic System Capitalism

Any Muslim or a Zimmi who revives a dead Ushri land would also own the neck and the produce of the land

Any Muslim who revives a dead Khiraji land which was never cultivated since Muslims opened it, would own the neck as well as produce of the land

Any Muslim or a Zimmi who revives a Khiraji land on which Khiraj was applied in the past would own the produce of the land but the neck remains with the State

No such provision in Capitalist system. Muzzara’s are being killed for asking their rights in Okara.

Through corporate farming imperialist multinationals are being awarded.

Sudan faced famine due to the policy of corporate farming.

Huge incentive for reviving 9,709,300 (one crore) acres of barren land of Pakistan.

Provides employment to people living in the villagesGives huge push to the economy

Colombian warlord says US firms paid death squads for bananas

Rory Carroll, Latin America correspondentSaturday May 19, 2007

The Guardian 

A jailed warlord has accused the US multinationals Del Monte, Dole and Chiquita of funding rightwing death squads while sourcing bananas from war-torn regions of

Colombia.

Besides this, government is also going to develop a new security force of 100,000 men to be split among the four provinces to help stabilize the investment by Arab Monarchs. This will cost the government about $2 billion to pay the salaries and train the security force. http://www.cadtm.org/Pakistan-starts-privatization-of

Residential LandIslamic Economic System Capitalism

Anybody who occupies a dead land (outside the planned city area) and revives it by building a house or a factory etc becomes the owner of the land as well

The State guarantees housing for the one who is in capable to build a house for himself and his relatives are also poor cannot support him

The Prophet (SAW) said: “The Son of Adam has rights to food, clothing and shelter.”

The system doesn’t allow the people to use the resources which Allah has bestowed to man

Common man’s biggest problem in building a house is the inflated prices of residential land that can easily be solved through the Islamic Economic System state.

Currency

Islamic Economic System CapitalismMetallic Currency

Gold SilverAny other precious metalCurrency notes can be used in lieu

of gold and silver

Fiat currency backed by confidenceDollarEuro

Protects the currency from foreign controlPuts a check on devaluation and fake inflationReturn of the Gold standard will strike a fatal blow to the

colonialist economy

Company Structure

Islamic Economic System CapitalismAll contracts should conform to

contracts laid down by shari’ah. Hence exploitation of the needy is not possible

Man made laws aimed at benefiting corporates are to be complied. Rules have been written to benefit those who wrote them. Golden rule! “he who has the gold rules”

Public limited and private limited companies Illegal. i.e. no stock exchanges, futures trading etc. in Islamic Economic System

Stock-exchange an integral part of western corporate business.

Speculative contracts lead to fiat (Alternative) economy and indexes which is used by the corporations to loot common man’s money while keeping them in dark as happened in the latest saga of energy giant Enron and second largest telecom company WorldCom.

Islamic Economic System’s economy will be protected from economic crisis as were witnessed in South East Asia during the late ’90s when “Asian Tigers” were wiped by the powerful foreign investors

Valid Companies in Islam

Islamic Economic System CapitalismThe Company of Equal (Al-’Inan)The Company of Bodies (Al-Abdan)The Company of Body and Capital

(Mudharaba)The Company of Reputation Faces

(Wujooh)Company of Negotiation (Mufawadha)

Public Limited Company

Private Limited Companies

Guarantee Limited

Unlimited Company

A Man is not separate from his company

He is responsible for the debt of the company. He the stake holder money is safeguarded

A man can not hide behind the corporate rules at the time of bankruptcy

The Company and the owner are two separate distinct bodies

Owner is not responsible for the debt of company beyond his investment

Owners always hide behind the corporate rules at the time of bankruptcy.

RibaIslamic Economic System CapitalismInterest transactions not allowed1

No interest based debt servicingEncourages the wealthy to under

take local investment rather than depositing their money in high interest deposit accounts

Freedom of ownership allows people to hoard money

Riba is the bate for the people to take money out of circulation/ investment and to put into deposit account

In 2006:07 Pakistan will pay 295 billion rupees in interest payment. This is 55 billion more than all foreign loan and grants for the year.

Relief to common man/ investorNo interest servicing to IMF and WB.

Banking System

Islamic Economic System CapitalismBank do not serve as financial

intermediaries. Hence in capitalist sense there are no banks.

They will provide services of the like debit card, LC for import export, Online fund transfer, internet payments, etc.

They will facilitate/establish communication between the investor (Muwakkil) and worker (Mudharib)

Banks acts as financial intermediaries

They provide services like debit card, LC for import export, Online fund transfer, internet payments, credit cards. Financing for various heads on interest etc

A source of hoarding of wealth

Islamic Economic System takes advantage of financial institutions providing financial services and networking whilst protecting the masses from the current banks system which spread their evil through hoarding of wealth, marginal reserve system and interest etc.

Stock exchangesIslamic Economic System CapitalismNo stock exchanges are there in

Islamic Economic System.

No speculative transactions are allowed as per Islam. Investment is done only in real trade strengthening economy.

No chance of drowning of money in stocks as recently happen when 4 billion dollars of small investors were lost in a matter of a week when KSE index dropped from 10,000 to 7000 points.

A major portion of investment is done in stocks whose more than 90 % portion has nothing to do with real trade.

Real trade has gradually been reduced to less than 10 % of international trade and 90% is only financial transaction.

Last year stock market crashed several times drowning trillions of rupees of investors.

Stock exchanges are a source of diversion of investment from real trade to speculative business.

If all the money that is invested in stocks is directed to real trade it will give rise to a robust economy

Foreign Loans- no wayIslamic Economic System CapitalismTaking Foreign loans would not be

allowed 1

Membership in colonial organisation is also not allowed like Paris club, ADP, Islamic Development Bank, World bank and of course IMF.

Foreign loans are the integral part of Pakistan’s capitalist economy

This year 239 billion rupees will be received as different type of foreign loans.

In 1980 Nigeria took a loan of $3.5 billion from the Paris club. By 1985 this debt had risen $5.8 billion. By 1998 it had risen to 20.9 billion, and is today estimated at 27 billion.

Sovereignty of Pakistan was mainly eroded due to foreign loans

IMF and WB dictate all our internal policies under the guise of ‘reforms’ and ‘good governance’

Islamic Economic System would liberate us from IMF & WB Structural Adjustment programmes (SAP’s), Poverty reduction strategy Papers (PRSP) conditionalities and improve our economy

Economic System:

Foreign Traders − not MNC’sIslamic Economic System

Foreign trade is assessed on the basis of the citizenship of the trader and not the origin of the goods except goods from countries we are in actual war with like Israel.

Merchants from countries that have treaties with the State are treated according to the terms of the treaties

Merchants from countries in a state of war with the State are prevented from trading in the State, unless given a special permission

Any country with whom we have actual war with, its citizens (such as Israel) is excluded from these rules. The rules applicable to the actual land of war (Dar al-Harb Fa’lan) apply to such country in all the relations

Economic System:

Local TradersIslamic Economic

SystemCapitalism

Merchants who are subjects of the State are prevented from exporting any goods that the enemies could benefit of militarily, industrially or economically

No such provision, hence Pakistan is helping India fulfil her energy needs by building two gas pipelines. Which would further strengthen Indian industry and Military to be used against Muslims of Pakistan

This Trade Policy protects the state from potential enemies in the future

They are not prevented from importing any property they own under the pretext of protecting the local industry

The government hurts the local trader under the pretext of “Smuggling” while reduces import duty to give monitory benefit to the foreign trader under the guise of “foreign investment”

There is nothing known as “Smuggling” in Islam as long as the citizen of the state imports Halal items

Import export dutiesIslamic Economic System Capitalism

A Muslim trader only has to pay Zakat (2.5%) of the property during import and export once a year1

No import or export duty other than zakat

Import and export duties may be as high as 15 to 20%.

Import duties on luxury cars reduced to suit the rich

A Zimmi (non-Muslim citizen) will pay according to the contract he had with state at the time of conquest 1

No such distinction

A Harbi (foreigner non-Muslim) will pay the same percentage of duty as his country applies on the traders of the Islamic Economic System 2

No such distinction

Low import and export duties will enhance trade and improve not only the conditions of the trader rather it will also help our exports

In a Capitalist state people in the legislative assemblies reduce and increase duties to suit their interests and make money.

Subsidy & WTO Regime

Islamic Economic System CapitalismState cannot join colonialist

organizations such as WTO 1No such restriction while joining these

organizations

State is automatically protected from the colonialist moves to control and cripple the economy. Even a treacherous ruler cannot harm the State if the Islamic system is implemented

State will provide subsidy to improve it’s economy

WTO regime wouldn’t allow states to give its industry/agriculture any subsidy

During the last whole century capitalists first strengthened their own economies through corporate mergers, subsidies and heavy import duties and now they are forcing other weak economies to open up their markets under the guise of “Free Trade” and provide “level economic playing field” to foreign and local businesses

Under the guise of Anti-Dumping, Environment and Child Labour laws the WTO has introduced handicaps to increase the cost of production of the third world countries.

Patent laws and Copy RightsIslamic Economic System Capitalism

Copyright and Patent laws are illegal in Islam. Nobody is allowed to reserve the publishing and printing rights including the author or prohibit use of technology under patent laws

If the book has not been printed and published, and thus is still an idea, the owner has the right to take payment for transferring these ideas to the public, the same way he can take payment for teaching them.

Trade marks would be protected ensuring that the buyer may not be deceived in buying sub-standard merchandise

In April 2005 Pakistan established IPO.

US didn’t allow other western countries to produce medicine for HIV since the patent laws were with the US company irrespective of how many people could die because of it

But when it came to “Anthrax” US threaten to bypass all patent laws for their own “national interest”

Copyright and patent laws are a big hurdle in dissemination of knowledge and in the welfare of the humanity.

Sahih Al-Bukhari and Sahih Al-Muslim, and books of old Muslims Scientist were never copyrighted. Had it been so, the west would still be in dark ages

Copyright laws are a tool of scientific colonisation of the west

Economic System:

Hoarding of Wealth & Price Fixing

Islamic Economic System CapitalismHoarding of wealth (money) is

haram and state will take practical steps to prevent it 1

People are “free” to hoard wealth for no reason

Islamic system ensures circulation of wealth In Capitalist system banks offer “interest” to encourage

people to inject money into economy

Islam prohibits price fixing 2

Islam prohibits monopoly 3 Capitalist are still in dilemma as to how

to get rid of monopolies; e.g. Microsoft break up litigation

Economic System:

Basic needs of the masses

Islamic Economic System CapitalismBasic needs of all citizens are

guaranteed such as food, clothing, shelter, education, health etc.

The land laws discussed earlier allow people to attain self-sufficient in food and housing as explained above

In the purest form of capitalism there is no concept of public welfare.

Islamic Economic System alleviates the suffering of the masses

Decreases crime and insecurity in the societyProduces a secure economic atmosphere which increases

economic activity and investment as the investor doesn’t run the risk of being homeless and struck by hunger in case of a loss

Economic System:

State RevenuesIslamic Economic System Capitalism

Sources of Bait -ul-Mal The booties and the spoil of war1, Al-Fai2 and the fifth3

Al-Kharaj Al-Jizya Protecting some Public property (Hima) 4

State property of land, building utilities and their revenues)

Al-Ushur Money attained illegally by the rulers, the employees of

the State, illicit money and money from penalties The fifth of Al-Rikaz (hidden treasures) minerals 5

The inheritance property of the one who has no inheritors 6

The property of apostates 7

Charity Funds – Zakat Taxes (only from the rich Muslims and in specific situations)

Predominant source of income is Taxes from the common people. People in the west are taxed upto 35% of their income

Budget expenditureIslamic Economic System

The expenditures of the State are based around seven areas:The Zakat funds – on fix 8 categories mentioned in the Qur’an.Spending money on the destitute and the poor to ensure their basic needs is a

must on the State.Spending on defence, heavy industry and security of the State as well as

carrying the Islamic Message to other lands.Allowances of State employees such as salaries of soldiers, civil servants,

judges, teachers and the like.Provide utilities to the people such as roads, water services, power services,

mosques, schools and hospitals and any other utility considered as necessity for the people.

Emergency expenditures such as during famine, flood, earthquake or attack by enemy.

Spending on development projects – Only if fund available

Decision making in Autocracy (dictatorship of an individual)

Decision making in Democracy (dictatorship of an elite group)

Decision making in Islamic Economic System

Ruling System:

Law making - the actual Cause of Corruption

Islamic Economic System DemocracyPolitical system gets cleaned from

corrupt peopleThe representatives cannot use the

system to cover up their corruption by legislating laws for their own interests

“Professional politicians” find no reason to invest millions as the job of the representative is to be serving the Ummah rather than a source of money making and exerting power

Corrupt people are attracted towards politics like bees towards nectarThe process of law making gives

parliamentarians the authority to make laws to not only protect their interests rather legitimize their corruption

“Professional politicians” invest millions of rupees in elections and rear “Ghundas”, to keep sincere people out of the political arena

Once in power, the corrupt entourage of these “Professional Politicians” i.e. the local “Ghundas” become untouchables, free to take “Bhatta” and kidnap for ransom

Hence democracy is the actual source of corruption in the society. It starts from the politicians at the top and goes all they way to the bottom with local “Ghundas” and “Jaggas” who have the protection and backing of these politicians and Govt. institutions

Ruling System:

Political Hierarchy (Flow Chart)